U.S. China Business Relations

Introduction

The containment policy of the United States culminated in 1972, when U.S. president Richard Nixon went on a diplomatic visit to China. The visit, which had been negotiated in advance by Nixon's national security advisor, Henry Kissinger, marked the beginning of normalization of U.S. relations with China.

The change in U.S. policy was a reflection of the realist strategies of the Nixon administration and an important shift in the global balance of power. China's alignment with the United States tipped the balance of power in favor of the West and frustrated any attempts by the Soviet Union to exploit the United States' defeat in Vietnam. Moreover, cooperation between Washington and Beijing enabled both countries to devote more resources to opposing Soviet power (Borrus, 52).

Discussion on U.S. China Business Relations

The shift in diplomatic policy and strategic cooperation was not easy for either country. The countries would have to find a way to compromise on certain issues, particularly on Taiwan. If the United States was to have diplomatic relations with the PRC and recognize the CCP as the government of China, it would have to limit its military and economic support to Taiwan. In return, China would have to agree to eliminate its isolationist polices and become a participant in the international community as a permanent member of the UN Security Council.

The United States finally met China's conditions for normalization in 1978, when U.S. president Jimmy Carter agreed to recognize the PRC as “the sole legal government of China” and abrogated the Taiwan Mutual Defense Treaty. However, the United States was able to maintain its ambiguous position on the international status of Taiwan. To minimize the appearance of duplicity, the Taiwanese embassy in Washington was closed, and ROC representatives were no longer treated as official diplomats (Bartlett, 42).

Concerned about Carter's unilateral withdrawal from the Taiwan treaty, Congress passed the Taiwan Relations Act in April 1979, which codified the U.S. commitment to sell defense weapons to Taiwan despite the PRC's vehement opposition. Negotiations over Taiwan would continue so long as the United States maintained informal security commitments and arms sales to the Republic of China.

After Mao's death in 1976, Deng Xiaoping, a former comrade of Mao, gradually emerged as the leader of the PRC. Under Deng, China's relations with the West and its economy improved. Deng relaxed the PRC's sluggish, inefficient, Soviet-style planned economy and began a series of economic decentralization programs.

Deng's ...